Thomas Pringle (Donegal, Independent) | Oireachtas source

I have been highlighting the importance of community banking for some time and have called on the Government to expand the remit and authority of our credit unions to provide community banks. Credit unions are an important part of Irish society and many families rely on them to provide loans for family essentials such as cars, education and house repairs. There is a trust between families and credit unions, a trust that has been lacking with banks for a long time. At this point, banks are too far removed from local communities and communities' wants and needs.

I welcome the Bill’s intention to expand the services of credit unions and encourage further community development. The community aspect is what makes credit unions unique and successful and we should ensure we protect this community focus going forward. It is for this reason that I cautiously welcome the Credit Union (Amendment) Bill. There are many positive aspects to the Bill and I recognise the extensive consultation process that took place during its drafting. As was noted by the Irish League of Credit Unions, however, there are aspects of the legislation that require amending.

I fear for the future of credit unions and I fear the vision the Government has for community banking. The key proposals in this Bill include providing for the establishment of corporate credit unions, enabling credit unions to share resources and opportunities, and allowing credit unions to refer lending business to each other and participate in loans to other credit unions. I understand that there are definite advantages to this but I fear that an amalgamation of multiple credit unions may take away from the community aspect of local people working in the local credit union and giving loans and advice to other locals and businesses. There is an importance to this, not just for local jobs but also for ensuring appropriate funding. The point of a credit union is that it is supposed to be specific and distinctive to the community it serves. A community’s needs are unique and constantly changing and the amalgamation of credit unions would shift focus from specific community needs. Credit unions are co-operative, not-for-profit organisations whose objective is to pursue the economic and social goals of members and local communities and it should stay that way. We should facilitate credit unions in maintaining their business model. We should not force them to amalgamate and join together. I am a member of Killybegs Credit Union. A county-wide credit union would not have the same effect or benefit. We may as well join a bank as join a county-wide credit union.

To give an example, when I approached a bank in Killybegs recently seeking a loan I was told I could not apply for a loan in the branch but had to ring Dublin to apply. Is that the way we want to go with the credit unions as well? When I rang the bank in Dublin and asked for a loan I was told the bank would ring me back. That was five months ago and I am still waiting for a call back. That is the kind of banking service we have now and it is wrong. If I want a loan, I can walk into the credit union, talk to a neighbour and tell that person what I need the loan for. They will discuss it with me and tell me what the repayments are. A couple of days later, I will have the loan. The credit union meets and decides if someone will get a loan. We will lose that from all of our credit unions, which is wrong.

I agree that it should not be the case that credit unions are only lending €5.5 billion of their €20 billion in assets. For this reason, I welcome the intention in the legislation that credit unions develop plans for lending in the community, for example, by providing small business and retrofit loans and engaging in agri lending. However, this does not have to be done through collaboration. Individual credit unions, when given the necessary support, are well equipped to handle this development. Each credit union should be given equal power in handling its lending in a community.

It also seems that the intention of the Bill is for credit union managers to have more power and their boards to have less. The legislation provides for the option of making the manager a member of the board, reducing the minimum number of board meetings to six per year and reducing the number of administrative issues to be mandatorily approved by the board. I would like to know what the reasoning is behind this move as it will be detrimental. I would also like to know what the ultimate aim is regarding credit unions. Is it the intention to make them into a type of bank? We should avoid this scenario at all costs. Perhaps the Minister of State will explain what the thinking and rationale are behind this and why we are pushing the credit unions to amalgamate and join together across the country.

I understand that with the closure of KBC Bank and Ulster Bank, and the closure of many bank branches throughout the country, particularly in rural areas, there is space for more banks. However, this should not be used to turn credit unions, or An Post for that matter, into banks. An Post and credit unions provide a personal and customer-specific service. Banking on the other hand has almost completely turned into an online service in which a computer determines the customer's banking abilities. We need to discourage this type of impersonal banking and protect what few personal services we have left these days.

Last year, the previous Minister of State, Deputy Fleming, while speaking to this legislation, stated: "While the common bond may appear to protect a credit union from competition from other credit unions, it does nothing to prevent competition from banks or non-banks". Competing with banks should not be the intention of the credit unions, however, and I would question this thinking. The intention of credit unions should be to serve the people, not the markets. The banks clearly only service the markets and they do not care about customers. To give an example, I am still waiting for a call back about my loan and I am sure there are thousands of others in the same position.

Credit unions in my constituency of Donegal are invaluable. My constituents rely on community banking to access loans that mainstream banks would not even dream of considering them for. There is no doubt that they are invaluable institutions. There is room for them to evolve, however, and this Bill is a significant step in doing that. I support those aspects of the Bill, but again I stress my concern about the future of credit unions and what the Government envisions for them. I hope they are valued for what they are and the services they provide to our communities, particularly those in rural Ireland.

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